Gold Heads for Second Monthly Gain as Weak Dollar Fuels Demand

Oct. 30 (Bloomberg) -- Gold, little changed in Asia, is poised for a second monthly gain as a slumping dollar increases the metal’s appeal as an alternative investment.

The dollar is set for a fourth monthly drop against the euro, its longest since 2004, as the U.S.’s return to growth renewed optimism a global recovery will quicken, buoying higher- yielding assets. Asian stocks rose after the U.S. economy expanded 3.5 percent in the third quarter and Japan reported an unexpected drop in September’s jobless rate.

“The U.S. growth data was encouraging which, in turn, lends strength for gold to climb further,” said Kim Jae Jun, Seoul-based trader with Eugene Investment & Futures Co. “Still it’s broadly in consolidation mode and needs more time before rallying again.”

Gold for immediate delivery traded at $1,048.50 an ounce at 1:48 p.m. in Singapore, compared with $1,047 yesterday and $1,007.70 at the end of September. The precious metal, which touched an all-time high of $1,070.80 on Oct. 14, increased 3.8 percent this month, taking this year’s gain to 19 percent.

Thirteen of 23 traders, investors and analysts surveyed by Bloomberg, or 57 percent, said bullion would fall next week. Seven forecast higher prices and three were neutral.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,104.43 tons as of Oct. 28, the company’s Web site showed. That’s the third consecutive daily decline.

Among other precious metals, silver increased 0.2 percent to $16.72 an ounce, platinum fell 0.3 percent to $1,332 an ounce and palladium was up 0.8 percent to $331 an ounce.

Gold Rises Most in Three Weeks as Dollar’s Drop Spurs Demand

Oct. 29 (Bloomberg) -- Gold rose the most in three weeks as a sliding dollar increased the metal’s appeal as an alternative investment.

The greenback tumbled for the first time in five sessions against the euro after a report showed the U.S. economy, the world’s biggest, expanded in the third quarter for the first time since June 2008, stoking demand for higher-yielding assets. Before today, gold futures dropped 3.2 percent since Oct. 21 after reaching a record $1,072 an ounce a week earlier.

“Gold is in play,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “The dollar is off because risk is back in favor. Risk appetite is equated with inflation, and you buy gold to fight inflation.”

Gold futures for December delivery rose $16.60, or 1.6 percent, to $1,047.10 an ounce on the New York Mercantile Exchange’s Comex division, the biggest gain for a most-active contract since Oct. 6.

Earlier, the metal touched $1,026.90, matching the lowest price since Oct. 6. The decline in the previous five sessions marked the longest slump since March.

“At this level, some people consider gold cheap,” said Bernard Sin, the head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “The dollar will continue to be the main driver.”

The metal has gained 18 percent this year, heading for a ninth straight annual increase, while the dollar has declined 5.8 percent against the euro.

‘Chasing Assets’

The U.S. economy expanded at a 3.5 percent annual pace from July through September after shrinking in the previous four quarters. That beat the median estimate of 3.2 percent forecast by 79 economists in a Bloomberg News survey.

“Economic strength can lead to inflation with everybody chasing assets,” Lesh of FuturePath said. “That is supportive for the gold market.”

The Federal Reserve has kept its benchmark interest rate at zero to .25 percent since December as President Barack Obama increased the nation’s marketable debt to a record $7.01 trillion to revive growth.

Investor Paul Tudor Jones has recommended buying gold now to hedge against future inflation.

“I have never been a gold bug,” Jones said in an Oct. 15 letter to investors. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”

Jones’s Greenwich, Connecticut-based Tudor Investment Corp. manages about $11.6 billion. The Tudor BVI hedge fund gained almost 15 percent in the nine months ended Sept. 30, according to the letter.

‘Appears Cheap’

“Gold appears to be cheap,” Jones said. “Gold’s value should increase as its scarcity relative to printed currencies increases.”

Barrick Gold Corp., the world’s largest gold producer, plans to eliminate the rest of its fixed-price forward-sales contracts within 12 months. The company said last month it would end the hedges, betting that the metal’s rally will continue.

Silver futures for December delivery gained 41.5 cents, or 2.6 percent, to $16.655 an ounce on the Comex. Platinum for January delivery rose $31.30, or 2.4 percent, to $1,338.20 an ounce on the Nymex, and palladium for December climbed $10.90, or 3.4 percent, to $327.50 an ounce.

Dollar Set for Fourth Monthly Loss Against Euro on Risk Demand

Oct. 30 (Bloomberg) -- The dollar headed for a fourth monthly drop against the euro, its longest stretch since 2004, as the U.S.’s return to growth renewed optimism a global recovery will quicken, aiding demand for higher-yielding assets.

The yen was little changed against the euro, set for the biggest monthly slide since May, after a government report showed Japan’s jobless rate unexpectedly dropped for a second month, reducing demand for the relative safety of the Japanese currency. Australia’s dollar is rising for a record ninth month as global stocks rallied and prices climbed for commodities that comprise more than half the South Pacific nation’s exports.

“The recovery is still at work and the liquidity is ample,” said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “You can’t stop money flying into higher-yielding currencies at the expense of funding currencies.”

The dollar traded at $1.4832 per euro at 9:47 a.m. in Tokyo from $1.4822 yesterday in New York. The yen was at 135.46 per euro from 135.51 yesterday. The greenback bought 91.32 yen from 91.41 yen.

Australia’s currency bought 91.51 U.S. cents from 91.50 cents in New York yesterday and is set to gain 3.7 percent in October.

The MSCI Asia Pacific Index of regional shares advanced 0.8 percent today and the Nikkei 225 Stock Average gained 1.1 percent. The Standard & Poor’s 500 Index increased 2.3 percent yesterday and crude oil for December delivery increased 3.8 percent to $79.87 a barrel.

U.S. Recovering

The dollar is poised for the longest stretch of monthly losses against the euro since 2004 as a Bloomberg News survey of economists showed that the Institute for Supply Management- Chicago Inc’s business barometer probably rose to 49.0 in October from 46.1 in the previous month. The data is due today.

Adding to signs the world’s largest economy is recovering, the Institute for Supply Management’s factory gauge also rose to 53.0 in October from 52.6 in the previous month, according to a separate Bloomberg News survey before the release on Nov. 3. Fifty is the dividing line between expansion and contraction.

The Commerce Department reported yesterday U.S. gross domestic product grew at a 3.5 percent annual pace in the third quarter, after shrinking in the previous four periods. The median forecast of 79 economists in a Bloomberg survey was for an expansion of 3.2 percent.

Japan Adds Jobs

The yen fell against 13 of the 16 most-active currencies as the unemployment rate declined to 5.3 percent from 5.5 percent in August. The median estimate of 29 economists surveyed by Bloomberg was for the rate to increase to 5.6 percent.

“Good data from Japan will strengthen the risk appetite that resurfaced on strong U.S. data,” said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.

Separate Japanese government figures showed the job-to- applicant ratio, a leading indicator of employment trends, improved for the first time in more than two years. The ratio rose to 0.43 last month from a record low of 0.42 in August, meaning there are 43 jobs for 100 job seekers.

Euro Versus Pound

The euro may rise for the first time in four days against the pound on speculation a German report will show retail sales rebounded in September, adding to signs the recession in the 16- nation region is over.

Retail sales in Germany, Europe’s largest economy, rose 1 percent in September after a revised 2.4 percent decline in August, according to a Bloomberg News survey of economists. The Federal Statistics Office releases the report at 8 a.m. in Weisbaden today.

“The recovery in the euro-zone economy appears to be on a solid footing,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The bias is for the euro to rise.”

European Central Bank council member Axel Weber yesterday signaled policy makers may start to withdraw emergency stimulus measures next year by scaling back the bank’s “very long-term” loans to banks. The comments are the first to indicate the ECB is getting closer to enacting its exit strategy.

The euro traded at 89.63 pence from 89.58 pence in New York yesterday, and was set for its first monthly decline versus the pound since June.

FCPO Commentary on 30/10/09

CPO 3rd month Jan futures contract rose RM37 higher as compare to previous trading sessions to close at RM2189 with a total of 10,250 lots traded in the market. CPO price traded higher after long consolidate within RM2130 and RM2140 regions during trading sessions.

Technically, CPO price surge fierce after manage to find support at 50% Fibonacci support levels at RM2130 regions while further confirm when CPO price manage to penetrate previous high resistance levels at RM2171 regions. Based on our technical view, our opinion suggests CPO price seems finish correction phase and resume to ride on bull again provided support levels at RM2130 and RM2103 were not violated during trading sessions, traders were advice to hold long position in the coming trading sessions while be cautious around resistance levels at RM2200 and RM2250 regions.

FKLI Commentary on 30/10/09

FKLI Oct Futures contract fall 7 points lower to close at 1238.5 levels as compare to previous trading session to with a total of 6,042 lots traded in the market. FKLI was traded higher gradually despite was opened lower during morning sessions due to Dow Jones overnight weak closing while regional indices were plunge lower during trading sessions.

Technically, FKLI was manage to penetrate 50% Fibonacci support level at 1236 despite several attempt during trading session leave the hourly chart with long tails. Based on our technical view, our opinion suggests FKLI could be possible to reverse bullish as bullish star candle was seen in the daily chart provided support levels at 1236 and 1227 must not be violated during trading sessions. Traders were advice to hold long position while be cautious around resistance levels at 1244 and 1256 regions.

Oil Drops a Second Day After Unexpected Rise in Gasoline Supply

Oct. 29 (Bloomberg) -- Crude oil dropped for a second day in New York after a government report yesterday showed an unexpected increase in U.S. gasoline stockpiles and crude supplies rose to a two-month high.

Oil fell the most in a month yesterday as gasoline inventories climbed 1.62 million barrels last week, the Energy Department said. A 1 million-barrel decline was forecast, according to a Bloomberg News survey. Prices also dropped as the dollar gained against the euro.

“The inventories report had a bearish tilt to it and it’s not surprising to see oil lose some ground,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “Gasoline inventories were greater than expected and fuel demand posted a week-on-week decline.”

Crude oil for December delivery fell as much as 43 cents, or 0.6 percent, to $77.03 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.17 at 10:41 a.m. Sydney time. Yesterday, the contract dropped $2.09, or 2.6 percent, to $77.46, the lowest settlement since Oct. 14. Prices have gained 73 percent since the start of the year.

The dollar traded at $1.4724 per euro at 10:37 a.m. Sydney time after reaching $1.4691, the strongest level since Oct. 12. A stronger dollar reduces the appeal of commodities to investors looking for an inflation hedge.

“Market sentiment has taken a significant turn to the negative side,” Hassall said. “We have seen the dollar claw back some ground on the back of that.”

Crude Supplies

Inventories of crude oil rose 778,000 barrels to 339.9 million last week, the Energy Department report showed yesterday. Supplies of distillate fuel, a category that includes heating oil and diesel, declined 2.13 million barrels to 167.8 million. Inventories were 29 percent higher than the five-year average for the week, the department said.

Refineries operated at 81.8 percent of capacity, up 0.7 percentage point from the previous week, the report showed. Refiners produced 8.83 million barrels of gasoline a day, up 4.5 percent from the prior week.

Fuel demand dropped 0.8 percent to an average of 18.5 million barrels a day last week, the report showed. Imports of crude oil increased 2.2 percent to 8.89 million barrels a day last week, the report showed. Fuel imports climbed 6.3 percent to 2.54 million barrels a day.

The Standard & Poor’s 500 Index retreated 2 percent to 1,042.63 in New York yesterday. The Dow Jones Industrial Average lost 119.48 points, or 1.2 percent, to 9,762.69. Australia’s benchmark S&P/ASX 200 Index dropped 1.8 percent at 10:38 a.m. Sydney time.

Brent crude oil for December settlement dropped $2.06, or 2.6 percent, to end the session at $75.86 a barrel yesterday on the London-based ICE Futures Europe exchange.

Yen Rises to Two-Week High Versus Euro on Economic Concerns

Oct. 29 (Bloomberg) -- The yen reached the highest in two weeks against the euro amid signs the global economic recovery is losing steam, damping demand for higher-yielding assets.

The 16-nation currency fell for a fourth day against the yen as Asian stock sank and before a report forecast to show German unemployment rose in October. The New Zealand dollar was near the lowest level in three weeks after the central bank left the key rate unchanged and signaled it won’t rise until the second half of 2010, damping demand for the nation’s assets.

“As optimism about the global economy wanes, investors will question if any other central bank besides the Reserve Bank of Australia is willing to hike rates,” said Shuzo Kakuta, senior foreign-exchange adviser at Tokyo Tomin Bank Ltd. “Emerging uncertainty about exit strategies may trigger unwinding of carry trades that were used to secure higher yields.”

The yen traded at 133.03 against the euro at 9:46 a.m. in Tokyo from 133.43 yesterday in New York. It earlier reached 132.82 yen, the highest level since Oct. 14. The dollar was at $1.4701 per euro from $1.4706 after reaching $1.4683, the strongest level since Oct. 12. The yen fetched 90.49 per dollar from 90.75 in New York.

New Zealand’s dollar was at 71.86 U.S. cents from 72.10 cents. It earlier hit 71.69 cents, the least since Oct. 5. The dollar reached C$1.0821, the strongest level since Oct. 5.

Economic Data

The euro headed for the longest stretch of losses since September as a Bloomberg News survey of economists showed that the jobless rate in Germany, Europe’s biggest economy, probably rose to 8.3 percent in October from 8.2 percent in the previous month. The jobs report is due today.

Goldman Sachs Group Inc. cut its forecast for third-quarter U.S. economic growth to 2.7 percent from 3 percent. The median forecast in a Bloomberg survey of 79 economists was for growth of 3.2 percent following four-straight quarters of contraction. The Commerce Department’s report on gross domestic report is due at 8:30 a.m. in Washington.

Japan’s currency climbed 3.4 percent to 51.01 versus the Brazilian real yesterday on speculation investors will reduce carry trades, in which they borrow in the currency of a nation with low interest rates to purchase assets in another country where returns are higher.

Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favored funding currencies among investors seeking higher yields.

Reserve Bank of New Zealand Governor Alan Bollard left the official cash rate at a record-low 2.5 percent and said he saw “no urgency” to begin a withdrawal of stimulus.

The Standard & Poor’s 500 Index dropped 2 percent yesterday on concern a rally in equities this year outpaced prospects for economic growth. The MSCI Asia Pacific Index of regional shares fell 0.9 percent today and the Nikkei 225 Stock Average slid 1.9 percent.

FCPO Commentary on 29/10/09

CPO 3rd month Jan futures contract fall RM18 lower as compare to previous trading sessions to close at RM2152 with a total of 11,634 lots traded in the market. CPO price was traded lower despite soybean oil and crude oil was traded within range during trading sessions.

Technically, CPO price continue riding south after manage to rebound 78.6% Fibonacci resistance levels at RM2187 regions. Based on our technical view, our opinion suggests CPO price would continue trading lower in the coming trading session provided resistance levels at RM2171 and RM2190 were not violated during trading sessions. Traders were advice to continue to hold short position for CPO trading while be cautious around support levels at RM2130 and RM2103 regions.

FKLI Commentary on 29/10/09

FKLI Oct Futures contract fall 8.5 points lower to close at 1245.5 levels as compare to previous trading session to with a total of 7,900 lots traded in the market. FKLI was traded lower as regional indices plunge during trading session despite Dow Jones overnight and electronic trading were traded firm during trading sessions.

Technically, FKLI plunge after 4 hours consolidate around 50% of Fibonacci resistance levels at 1256.5 regions. Based on our technical view, our opinion suggests FKLI would encounter great buying interest around support levels 1242 and 1233.5 regions. Correction would go further only provided support levels were not able to hold against the selling pressure. Traders were advice to hold short once support levels were breach during trading sessions. Resistance levels were seen at 1253 and 1265 regions.

India soybean falls further on arrivals, global cues

MUMBAI, Oct 28 (Reuters) - India soybean futures extended losses on Wednesday weighed by rising arrivals in the domestic markets and tracking weak overseas leads, analysts said.

However, hopes of revival in domestic and export demand of soymeal could kept the downside limited, they added. Soybean is crushed to produce soymeal and soyoil.

Malaysian crude palm oil futures fell 0.4 percent on Wednesday, extending losses to a third day on talk of seasonally higher output boosting stocks. See [ID:nKLR50365]

Palm oil and soybean are related commodities and their prices often move in tandem.

The most-traded November contract NSBX9 on the National Commodity and Derivatives Exchange was 0.66 percent lower at 2,170 rupees per 100 kg at 11:09 a.m., after losing 0.4 percent in the previous session.

Gold May Decline as Dollar’s Advance Reduces Investment Demand

Oct. 28 (Bloomberg) -- Gold, little changed in Asia, may decline on speculation that the dollar will extend gains against major currencies, reducing demand for the precious metal.

The dollar may rise versus the euro for a fourth day, the longest stretch of gains since August, after consumer confidence fell this month in the U.S. and before a report forecast to show German unemployment rose. Gold, which often moves inversely to the U.S. currency, has dropped 3 percent since touching an all- time high of $1,070.80 an ounce on Oct. 14.

“The gold market is still very much reflecting developments in the U.S. dollar,” said Toby Hassall, an analyst with CWA Global Markets Pty Ltd. in Sydney. Any drop in bullion is “certainly reaction to a bounce in the U.S. dollar.”

Gold for immediate delivery traded at $1,038.50 at 1:20 p.m. in Singapore compared with yesterday’s close of $1,040.05. The precious metal has risen 18 percent this year. The dollar traded at $1.4809 per euro in Tokyo from $1.4804 yesterday in New York.

Hedge funds and other large speculators trimmed net-long positions in gold futures by 2 percent as of Oct. 20 from a record the previous week, and miners, producers and commercial users increased their net-short position, Commodity Futures Trading Commission data show. A net-long position benefits when prices rise, while net-shorts gain from a decline.

Still, Jon Nadler, analyst with Kitco Metals Inc., wrote in an Oct. 26 report that the level of speculative long positions remained worrisome, posing the risk of an “opening-of the- floodgates type of liquidation” should prices extend a drop.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,106.87 tons as of Oct. 26. The holding reached a record of 1,134 tons on June 1.

Among other precious metals, silver fell 0.2 percent to $16.66 an ounce, platinum added 0.2 percent to $1,317.50 an ounce and palladium rose 0.6 percent to $330.25 an ounce.

Yen Rises as Economic Concerns Damp Demand for Higher Yields

Oct. 28 (Bloomberg) -- The yen gained against major counterparts on speculation the global economic recovery will slow, reducing demand for high-yielding assets.

The yen traded near a one-week high against the euro before reports this week forecast to show German consumer prices and unemployment worsened, backing the case for the European Central Bank to keep interest rates low. Australia’s dollar fell toward a one-week low after a government report showed annual inflation slowed, easing pressure on the central bank to accelerate interest-rate increases.

“As the market shifts attention to the sustainability or the strength of a recovery from a cyclical upturn, the mood of euphoria may wane,” said Masahide Tanaka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second- largest bank. “The risk of unwinding, of a capital flight into higher-yielding currencies, may increase.”

The yen rose to 135.55 per euro as of 10:03 a.m. in Tokyo from 135.89 in New York yesterday, after earlier reaching 135.43, the highest level since Oct. 21. Japan’s currency fetched 91.50 per dollar from 91.80. The dollar traded at $1.4813 per euro from $1.4804 yesterday, when it touched $1.4770, the strongest level since Oct. 13.

Australia’s currency lost 0.2 percent to 91.47 U.S. cents. It fell 0.6 percent to 83.60 yen.

The Conference Board’s consumer confidence index dropped to 47.7 in October from a revised 53.4 in the previous month, the New York-based research group reported yesterday. The median forecast of 74 economists in a Bloomberg survey was for an advance to 53.5.

German Prices

The German jobless rate probably rose to 8.3 percent in October from 8.2 percent in the previous month, according to a Bloomberg News survey of economists before the report tomorrow.

German consumer prices, calculated using a harmonized European Union method, fell 0.1 percent in October from a year earlier after slipping 0.5 percent in September, according to a Bloomberg News survey of economists. The Federal Statistics Office in Wiesbaden will release the report later today.

“We expect German CPI to remain weak,” Brian Kim, a currency strategist in Stamford, Connecticut, at UBS AG, wrote in a research note yesterday. “We continue to target the euro- dollar back at $1.45 in one month as sentiment is clearly showing signs of strain.”

The ECB will maintain its benchmark interest rate at 1 percent through the second quarter of 2010, a separate Bloomberg survey showed. The central bank next meets on Nov. 5.

Australia’s consumer price index advanced 1 percent from the second quarter, when it gained 0.5 percent, the Bureau of Statistics said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg News was for a 0.9 percent increase. Prices gained 1.3 percent from a year earlier.

Unsustainable Rally

The yen rose against all 16 of the most-active currencies on speculation a rally in stocks and commodities can’t be sustained.

The six-month rally in shares and raw materials is probably at its peak as U.S. growth lags behind historical averages, according to Bill Gross at Newport Beach, California-based Pacific Investment Management Co.

Gross, a founder and co-chief investment officer of the world’s biggest manager of bond funds, has predicted a “new normal” in the global economy that will include heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy.

“What has happened is that our ‘paper asset’ economy has driven not only stock prices, but all asset prices higher than the economic growth required to justify them,” Gross wrote yesterday on Pimco’s Web site.

The Standard & Poor’s 500 Index slipped 0.3 percent to 1,063.41 yesterday in New York. The Nikkei 225 Stock Average fell 0.8 percent today.

Geithner Comments

Adding to signs the recovery will be slow, Japan’s retail sales fell for a 13th month in September, the Trade Ministry said today in Tokyo. Sales slid 1.4 percent from a year earlier,. The median estimate of 13 economists surveyed by Bloomberg was for a 1.6 percent decline.

Gains in the dollar may be tempered after U.S. Treasury Secretary Timothy Geithner said he expects the government will receive repayment “relatively quickly” from most of the big banks helped by the $700 billion financial rescue program.

“I expect you’re going to see a lot of the rest of the money out in the system there come back relatively quickly,” Geithner said yesterday in New York at a conference of the Securities Industry and Financial Markets Association. The organization is a trade group that includes Goldman, Sachs & Co., Banc of America Securities LLC and State Street Corp.

FKLI Commentary on 28/10/09

FKLI Oct Futures contract fall 7 points lower to close at 1254 levels as compare to previous trading session to with a total of 7,849 lots traded in the market. FKLI manage to rebound higher despite regional indices were traded lower during trading sessions after budget was announced last Friday.

Technically, FKLI price manages to rebound 50% Fibonacci resistance level at 1256 regions during trading session after complete to 161.8% Fibonacci support levels at 1246.6 regions. Based on our technical view, our opinions suggest FKLI would expect to be supported around 78.6% Fibonacci support levels at 1242 and 1233.5 regions. Traders were advice to long on dip in the coming trading sessions provided support levels were not violated. Resistance levels were seen at 1265 and 1271 regions.

FCPO Commentary on 28/10/09

CPO 3rd month Jan futures contract plunge RM48 lower as compare to previous trading sessions to close at RM2170 with a total of 10,570 lots traded in the market. CPO price was traded lower as soybean oil and crude oil electronic trading were traded weak while overnight trading were also closed weak.

Technically, CPO price continue to fall south after break from rising wedge in the daily chart after only manage to rebound 23.6% Fibonacci resistance level at RM2196 regions. Based on our technical view, our opinion suggests CPO price would continue to trade lower in the coming trading sessions provided resistance levels at RM2180 and RM2200 must not be violated. Traders were advice to short position in the coming trading sessions while be cautious around support levels at RM2131 and RM2103.

Crude Oil Trades Little Changed After Declining Most in Month

Oct. 27 (Bloomberg) -- Crude oil was little changed after falling the most in a month in New York yesterday on concern that prices have risen faster than demand.

Oil dropped as U.S. equities slumped on concern the government will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout. OPEC may increase production targets when it meets in December after the International Energy Agency warned that rising prices threaten the global economic recovery.

“The price of oil was pushed back below the $80 mark by the thought of OPEC increasing production at their next meeting in December and increased concerns over banking sector liquidity,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “The U.S. dollar index jumped up thanks to worries about market instability, helping also to weigh on the price of oil.”

Crude oil for December delivery rose 14 cents to $78.82 a barrel at 8:29 a.m. Singapore time. Yesterday, it dropped $1.82, or 2.3 percent, to close at $78.68 a barrel on the New York Mercantile Exchange, the biggest decline since Sept. 24 and the lowest settlement since Oct. 16. Prices have gained 76 percent this year and reached a one-year high of $82 a barrel on Oct. 21.

The Standard & Poor’s 500 Index tumbled 1.2 percent to 1,066.95 in New York. The Dow Jones Industrial Average retreated 104.22 points, or 1.1 percent, to 9,867.96. Almost five stocks dropped for each that rose on the New York Stock Exchange.

U.S. Supplies

The dollar traded at $1.4873 per euro at 9:30 a.m. in Tokyo from $1.4876 yesterday in New York. The greenback reached $1.5063 yesterday, the weakest level since August 2008.

Brent crude oil for December settlement declined 0.04 percent, or 3 cents, to $77.23 a barrel on the London-based ICE Futures Europe exchange at 8:19 a.m. Singapore time. Yesterday it declined $1.66, or 2.1 percent, to end the session at $77.26 a barrel.

An Energy Department report due tomorrow will show that U.S. inventories of crude oil rose 1.5 million barrels last week, according to the median of nine estimates by analysts in a Bloomberg News survey. Supplies in the week ended Oct. 16 climbed 1.3 million barrels to 339.1 million, leaving stockpiles 9.4 percent above the five-year average for the period.

Analysts forecast that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week.

The Organization of Petroleum Exporting Countries will meet Dec. 22 in Luanda, Angola, to review production quotas as oil rises above $75 a barrel. Some member countries are able to pump more oil if the market requires it, OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos said in an interview on Oct. 25.

Gold Falls as Dollar’s Rebound Erodes Demand for Alternative

Oct. 26 (Bloomberg) -- Gold fell the most in more than a week after the dollar rebounded, eroding the appeal of the precious metal as an alternative asset. Silver posted the biggest decline in a month.

The greenback rose as much as 0.8 percent against a basket of six major currencies after dropping as much as 0.4 percent earlier. Gold, which typically moves inversely to the U.S. currency, climbed to a record $1,072 an ounce on Oct. 14.

“It’s all predicated on the dollar,” said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “If the dollar rallies, gold can see some downside.”

Gold futures for December delivery fell $13.60, or 1.3 percent, to $1,042.80 on the Comex division of the New York Mercantile Exchange, the biggest decline for a most-active contract since Oct. 15.

The metal had gained for four straight weeks, while the dollar dropped for three consecutive weeks against the currency basket.

“A lot of people are looking at the performance of the dollar,” said Afshin Nabavi, a senior vice president at bullion refiner MKS Finance SA in Geneva. “Traders are likely to buy on dips.”

Silver futures for December delivery fell 62.8 cents, or 3.5 percent, to $17.095 an ounce on the Comex, the biggest decline since Sept. 24.

Gold has gained 18 percent in 2009, while the dollar dropped 6.5 percent. Silver jumped 51 percent.

Silver Forecast

Silver may rise to $20 next year as some investors seek a cheaper alternative to gold, Bank of America-Merrill Lynch said today in a report.

“The steady increase of investment in silver was heavily influenced by increases in gold prices during the past few months,” according to the report. “Given that silver is cheaper than gold, market participants can substitute into the less-expensive alternative.”

Platinum for January delivery dropped $23.70, or 1.7 percent, to $1,345.80 an ounce on the Nymex, and palladium for December delivery declined $6.20, or 1.8 percent, to $333.25 an ounce.

Dollar Advances as Bank Losses, Stock Drop Spur Safety Demand

Oct. 27 (Bloomberg) -- The dollar gained for a third day against the euro and reached a one-month high versus the yen on concern U.S. bank losses will derail the global economic recovery, sapping demand for higher-yielding assets.

The dollar traded near the highest in almost one month against the yen on speculation U.S. lawmakers will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout. Australia’s dollar traded near the lowest in a week before a report tomorrow that may show consumer price gains slowed, reducing pressure on the central bank to raise interest rates.

“There are lingering downside risks to the U.S. housing sector and banking industry,” said Mitsuru Saito, chief economist in Tokyo at Tokai Tokyo Securities Co. “We may need to carefully reassess the sustainability of a rally in risk assets funded by the dollar.”

The dollar traded at $1.4853 per euro at 9:16 a.m. in Tokyo from $1.4876 yesterday in New York. The greenback reached $1.5063 yesterday, the weakest level since August 2008. The dollar advanced to 92.29 yen from 92.19 yen yesterday, after earlier today reaching 92.32 yen, the strongest level since Sept. 21. The euro was at 137.07 yen from 137.10 yen.

Australia’s currency was at 91.58 U.S. cents from 91.62 cents in New York yesterday when it touched 91.26 cents, the weakest since Oct. 19. Australia’s annual consumer price inflation slowed to 1.2 percent in the third quarter from 1.5 percent, according to the median forecast of 20 economists in a Bloomberg survey. The government will release the data tomorrow.

The Nikkei 225 Stock Average fell 0.8 percent and the MSCI Asia Pacific Index of regional shares declined 0.7 percent today. The Standard & Poor’s 500 Index slid 1.2 percent in New York yesterday.

Stocks Tumble

U.S. stocks fell after Senator Bill Nelson said senate leaders are negotiating to extend and gradually reduce the housing tax credit through 2010. The credit was set to expire at the end of November.

Bank shares fell 3.3 percent collectively, the steepest decline in the S&P 500 among 24 industries, after Rochdale Securities LLC　analyst Dick Bove downgraded Fifth Third Bancorp, SunTrust Banks Inc. and U.S. Bancorp on concern loan losses will remain high.

“The government apparently wants the bank to raise $45 billion in the market from a new capital offering before it will let the bank redeem the TARP preferreds,” Bove wrote in a note on Bank of America dated Oct. 23, referring to the preferred stock purchased by the government as part of the Troubled Asset Relief Program.

“Selling more stock would meaningfully harm Bank of America’s shareholders,” he wrote.

Federal Deposit Insurance Corp. Chairman Sheila Bair said yesterday that banks continue to face “serious challenges.”

Bair also said tapping a Treasury Department credit line to replenish funds depleted by a surge of bank failures would harm her agency and the banking industry. She made the comments yesterday in a speech at an American Bankers Association convention in Chicago.

Fed’s Policy

The dollar traded near a five-week high against the yen after the Wall Street Journal this week said Fed officials are likely to discuss next week how and when to signal the possibility of higher U.S. rates.

At the previous meeting on Sept. 23, the Fed’s policy making Open Market Committee agreed to keep the benchmark rate in a range of zero to 0.25 percent. In a statement following the gathering they said economic conditions will warrant keeping the rate low “for an extended period.”

“Yields in the U.S., particularly in the long end, are rising as the Wall Street Journal reported the Fed may change the ‘for an extended period’ phrase in the statement at the November meeting,” said Yuji Saito, head of the foreign- exchange group in Tokyo at Societe Generale SA, France’s third- largest bank. “This is being perceived as the first step toward an exit strategy, and is likely to lead to dollar-buying.”

Fed policy makers are contemplating the best way to let the market know that a period of record-low rates will draw to an end, the Wall Street Journal said on Oct. 24, without naming a source. The issue may be “on the table” when the Federal Open Market Committee meets Nov. 3-4.

The yield on the 10-year Treasury note increased eight basis points, or 0.08 percentage point, to 3.57 percent in New York yesterday, according to BGCantor Market Data. The yield touched 3.58 percent, the highest level since Aug. 24.

Federal Reserve will raise the policy rate by to 0.5 percentage points in the second quarter 2010, while the Bank of Japan is forecast to maintain interest rates on hold at least until the first quarter 2011, according to a Bloomberg News survey of economists.

Kiwi Falls

New Zealand’s dollar, known as kiwi, fell to the lowest level in almost one week against the U.S. dollar after New Zealand Prime Minister John Key said his country’s central bank is unlikely to raise interest rates from a record low this year as inflation appears to be contained.

“The very high exchange rate is helping offset any imported inflation concerns,” Key said in an interview yesterday in Kuala Lumpur. “I would personally be surprised if they raise rates in 2009.”

The Reserve Bank of New Zealand, which acts independently of the government, will announce its next rates decision on Oct. 29. Consumer prices rose 1.3 percent in the third quarter, within the bank’s 1 percent to 3 percent targeted band. Key, a former foreign exchange trader with Merrill Lynch & Co., said the country’s base rate is already “well above” most of its trading partners.

Benchmark interest rates are 2.5 percent in New Zealand and 3.25 percent in Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets and driving up their currencies. Key said the New Zealand dollar, which rose to a 15-month high of 76.35 cents last week, is too strong.

New Zealand’s dollar fetched 74.60 U.S. cents from 74.77 in New York yesterday when it dropped as low as 74.53, the least since Oct. 20.

FCPO Commentary on 27/10/09

CPO 3rd month Jan futures contract traded RM20 lower as compare to previous trading sessions to close at RM2218 with a total of 5,863 lots traded in the market. CPO price was traded lower despite export figure show favorable result on demand as compare to previous month. Soybean oil and crude oil electronic trading were traded mix during trading session.

Technically, CPO price seems break down from the rising wedge in the hourly chart and manage to reach target at 161.8% Fibonacci support levels at RM2105 regions. Based on our technical view, our opinion suggests CPO price would continue to trade lower in the coming trading session provided resistance levels at RM2227 and RM2240 were not violated during trading sessions. Traders were advice to hold short position in the coming trading session while be cautious around support levels at RM2190 and RM2160 regions.

FKLI Commentary on 27/10/09

FKLI Oct Futures contract fall 4.55 points lower to close at 1261 levels as compare to previous trading session to with a total of 2,369 lots traded in the market. FKLI was mainly traded sideways as regional indices and Dow Jones electronic trading were traded within range during trading sessions.

Technically, FKLI price manages to rebound 50% Fibonacci resistance level at 1265 regions during trading session but closed within sideways range after spurt up for less than 5 minutes. Based on our technical view, our opinion suggests FKLI could be possible to test support levels at 1254.5 and 1242 regions in the coming trading session before would continue to ride on the bull rally again. Traders were advice to hold long position around support levels at 1254.5 and 1242 while be cautious resistance levels at 1265 and 1271 regions. Uptrend would remain intact provided support levels at 1233.5 and 1242 were not violated during trading sessions.

Crude May Decline on Ample Stockpiles, Survey Shows

Oct. 23 (Bloomberg) -- Crude oil futures may fall next week on speculation that U.S. inventories are sufficient to meet weakening demand.

Eighteen of 36 analysts, or 50 percent, said oil will drop through Oct. 30. Twelve respondents, or 33 percent, forecast that the market will rise and six said prices will be little changed. Last week, analysts were split over whether prices would rise or fall.

“There is significant downside risk for crude oil,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Inventories remain high and demand is still weak.”

Crude oil stockpiles rose 1.31 million barrels to 339.1 million last week, the U.S. Energy Department said in a report Oct. 21. The gain left inventories 9.4 percent above the five- year average for the period. Supplies of distillate fuel, a category that includes heating oil and diesel, were 30 percent higher than average, the department said.

Fuel demand dropped 1.4 percent to an average of 18.7 million barrels a day during the week ended Oct. 16, according to the department. Consumption of distillate fuel fell 2 percent to 3.49 million barrels a day.

Crude oil for December delivery rose $1.48, or 1.9 percent, to $80.50 a barrel this week on the New York Mercantile Exchange. Futures are up 80 percent this year.

The oil survey has correctly predicted the direction of futures 47 percent of the time since its start in April 2004.



Bloomberg’s survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:

RISE NEUTRAL FALL
12 6 18

Soybeans Rise as Wet, Cold Weather Threatens to Harm U.S. Crop

Oct. 23 (Bloomberg) -- Soybeans capped a third straight weekly gain, the longest rally since early June, on speculation that rain, snow and cold weather will extend U.S. harvesting delays, threatening to harm crop yields.

Three inches (7.6 centimeters) of rain and some snow fell in parts of the Midwest in the past two days and the region is facing cold, wet weather for the next two weeks, the U.S. National Weather Service said. The pace of soybean harvesting as of Oct. 18 was less than half the average for the previous five years, the U.S. Department of Agriculture said this week.

“It’s going to be very difficult to get back into the fields before November,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “Soybeans are more at risk of yield losses from snow and rain than corn.”

Soybean futures for January delivery rose 0.5 cent to $10.075 a bushel on the Chicago Board of Trade, after earlier reaching $10.2925, the highest since Aug. 14. The most-active contract rose 3.1 percent this week and is up 14 percent since Oct. 2.

About 30 percent of U.S. soybean crops were harvested by Oct. 18, up from 23 percent a week earlier, USDA data show. In the previous five years, 72 percent of the crop was collected by the same time of the season.

Soybean output will jump 9.5 percent to a record 3.25 billion bushels this year from 2008, the USDA has forecast.

Valued at $27.4 billion, soybeans are the second-biggest U.S. crop, behind corn, according to the USDA. The U.S. is the world’s largest producer and exporter of the oilseed.

Dollar Trades Near One-Month High Versus Yen on Rate Outlook

Oct. 26 (Bloomberg) -- The dollar traded near a one-month high against the yen on speculation the Federal Reserve will increase interest rates sooner than economists forecast.

The dollar may gain versus higher-yielding currencies such as Australia’s dollar after Philadelphia Fed President Charles Plosser told Bloomberg Radio last week his “instinct is the time for raising rates will be before many of my colleagues” think it is. Fed officials are likely to discuss next month how and when to signal the possibility of higher U.S. interest rates, the Wall Street Journal reported without citing anyone.

“As the global economy stabilizes from the financial turmoil, it is unavoidable for central banks across the globe to review credit-easing measures and trim or even terminate them at some point,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of France’s third-largest bank. “Risk trades, funded by cheap dollars, may face unwinding.”

The dollar was at 92.10 yen as of 7:46 a.m. in Tokyo from 92.06 in New York on Oct. 23. It earlier touched 92.21 yen, the strongest level since Sept. 21. The U.S. currency was unchanged at $1.5008 per euro. The greenback touched $1.50 on Oct. 21 for the first time since August 2008. Japan’s currency changed hands at 138.22 per euro from 138.15.

The Federal Reserve’s benchmark interest rate is near zero, compared with 3.25 percent in Australia and 2.5 percent in New Zealand, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

FOMC Meeting

Members of the U.S. central bank are beginning to consider the best communications strategy for letting the market know that an “extended period” of record-low rates will draw to an end, the Journal reported on Oct. 24. The issue may be “on the table” when the Federal Open Market Committee meets Nov. 3-4.

At their most recent meeting, on Sept. 23, members of the Fed’s policy making Open Market Committee agreed to keep the benchmark rate in a range of zero to 0.25 percent, where it’s been since December 2008. In a statement following the gathering they said economic conditions will warrant keeping the rate low “for an extended period.”

The low rates will risk creating future inflation, Plosser said, particularly given the more than $1 trillion the Fed has pumped into the economy by expanding its balance sheet.

“It’s a whole notion that ultimately monetary policy does work with a lag,” he said last week. “If you wait until inflation’s here, it’s too late, so you have to be forward looking.”

Futures Positions

Futures traders decreased their bets that the yen will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission showed.

The difference in the number of wagers by hedge funds and other large speculators on an advance in the yen compared with those on a drop -- so-called net longs -- was 31,185 on Oct. 20, compared with net longs of 33,339 a week earlier.

The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 36,033 on Oct. 20, compared with net longs of 43,367 a week earlier.